Buy Imax because of its improving China box office, analyst says

• MKM Partners cited the $18 million of IMAX ticket sales for "Journey to the West: The Demons Strike Back" and the strong opening weekend for "The Fate of the Furious" in China as evidence of a better box office environment.
• The firm reiterated its buy rating and $40 price target for IMAX.

Customers buy tickets in a Wanda Imax cinema in Weifang, China.

Zhang Peng | LightRocket | Getty Images

Investors should buy Imax shares due to its strong movie slate in China this year, according to MKM Partners, which reaffirmed its buy rating on the company.

"IMAX's box office results in China are improving after a disappointing 2016, which had bearish investors questioning if the country was going through a secular issue rather than our perception of a cyclical problem driven more by quality," analyst Eric Handler wrote in a note to clients Monday. "In 1Q, IMAX benefited from the success of local language title, 'Journey to the West: The Demons Strike Back.' … The positive momentum has continued into 2Q."